Housing Suggested Solutions Won’t Work

On Monday 30 October 2006, the Hon Chris Carter,
New Zealand Labour Government Minister of Housing addressed
the Local Government Housing Affordability Forum in
Wellington. He stated that the Government recognises that
the lack of housing supply is the core problem and outlined
some suggested solutions that need to be considered.

He also said that the purpose of his speech at this
stage is to encourage greater public discussion, prior to
policy options being considered.

“Chris Carter
must be warmly congratulated for the open approach he is
taking to this issue and being clear in that the Governments
focus is very much on increasing housing supply” said Hugh
Pavletich, co author of the Demographia International
Housing Affordability Survey www.demographia.com . adding “But regrettably, his
initial suggested mix of interventionist solutions will not
work. Put simply, urban land supply must be opened
up.”

Hon Chris Carter outlined the seriously
deteriorating New Zealandhome ownership levels, which are
now below those of the United Kingdom, United States,
Canadaand Australia. In 1991 our ownership level was 74%; in
2001 it had slumped to 68% and is now estimated to be 65%,
with Aucklandjust 61%. The latest Census information due for
release 9 December will clarify the situation.

New
Zealand’s housing stock is approximately 1,400,000 units,
which suggests that in less than five years around 43,000
houses have been priced out of home ownership, forcing
people to rent.

“These sorry figures indicate that
120,000 New Zealanders have been denied the right to the
opportunity of homeownership in just five years. Since 1991,
a shocking 352,000 people have been thrown in to the rental
market. This represents populations in excess of
Christchurchand Manukau” said Mr Pavletich, adding “No
wonder our crime statistics are up and social indicators are
down, as young people in particular, are being denied the
opportunity to participate fully in our society.”

The 2006 Demographia International Housing Affordability
Survey www.demographia.com of the United Kingdom, Republic
of Ireland, Canada, United States, Australia and New Zealand
released January this year, identified 24 urban markets of
the 100 surveyed as currently “affordable”, in that
people did not have to pay any more than 3 times their
annual household income to house themselves.

New
Zealandsposition, as outlined within the Ministers speech
and the Survey, is that New Zealanders housing is at in
excess of 6 times incomes. In 1991 New Zealandhousing costs
were near 3 time’s household incomes.

“It is
important New Zealanders realize that these inflated prices
creating this unnecessary social havoc, are artificial and
caused simply by inept local politicians and planners, for
misguided ideological reasons. All they need to do is ensure
an adequate supply of land to solve the problem” said Mr
Pavletich.

New Zealand’s land area is 269,000
square kilometres of which substantially less than 1.4% is
urbanised. To provide sufficient land for further urban
development would require 29 square kilometres or one
hundredth of one percent of New Zealand’s land area each
year.

“We couldn’t urbanise any more than a
total of 2% of our total land area over the next 50 years if
we tried” said Mr Pavletich.

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